Question 1

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

Accepted Answer

A) True 
 B)False

Question 2

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Accepted Answer

A)  Accounting equation. 
B)  Cost principle. 
C)  Going-concern assumption. 
D)  Realization principle. 
E)  Business entity assumption.

Question 3

Accounting is an information and measurement system that does all of the following except:

Accepted Answer

A)  Identifies business activities. 
B)  Records business activities. 
C)  Communicates business activities. 
D)  Eliminates the need for interpreting financial data . 
E)  Helps people make better decisions.

Question 4

If assets are $99,000 and liabilities are $32,000, then equity equals:

Accepted Answer

A)  $32,000. 
B)  $67,000. 
C)  $99,000. 
D)  $131,000. 
E)  $198,000.

Question 5

Determine the net income of a company for which the following information is available for the month of September. 
Service revenue.........................	$300,000
Rent expense.............................	   48,000
Utilities expense........................	 3,200
Salaries expense........................	81,000

Accepted Answer

A)  $263,800. 
B)  $432,200. 
C)  $171,000. 
D)  $167,800. 
E)  $252,000.

Question 6

Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or dividends to stockholders.

Accepted Answer

A) True 
 B)False

Question 7

If the liabilities of a business increased $75,000 during a period of time and the stockholders' equity in the business decreased $30,000 during the same period, the assets of the business must have:

Accepted Answer

A)  Decreased $105,000. 
B)  Decreased $45,000. 
C)  Increased $30,000. 
D)  Increased $45,000. 
E)  Increased $105,000.

Question 8

Creditors' claims on the assets of a company are called:

Accepted Answer

A)  Net losses. 
B)  Expenses. 
C)  Revenues. 
D)  Equity. 
E)  Liabilities.

Question 9

The ________________ assumption states that transactions and events are expressed in money units.

Accepted Answer

The answer of The ________________ assumption states that transactions and...

Question 10

The first section of the income statement reports cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 11

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 12

If assets are $365,000 and equity is $120,000, then liabilities are:

Accepted Answer

A)  $120,000. 
B)  $245,000. 
C)  $365,000. 
D)  $485,000. 
E)  $610,000.

Question 13

The statement of cash flows reports all of the following except:

Accepted Answer

A)  Cash flows from operating activities. 
B)  Cash flows from investing activities. 
C)  Cash flows from financing activities. 
D)  The net increase or decrease in assets for the period reported. 
E)  The net increase or decrease in cash for the period reported.

Question 14

Another name for equity is:

Accepted Answer

A)  Net income. 
B)  Expenses. 
C)  Net assets. 
D)  Revenue. 
E)  Net loss.

Question 15

Describe the income statement and the relation between revenues, expenses, and net income or loss.

Accepted Answer

The answer of Describe the income statement and the relation...

Question 16

Match between columns
                        Premises: Balance sheet
Time period assumption
Full disclosure principle
Objectivity principle
Securities and Exchange Commission
IASB
Generally accepted accounting principles
Statement of retained earnings.
Cost principle
Statement of cash flows

Accepted Answer

The Answer of A principle that requires the information in is...

Question 17

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

Accepted Answer

A) True 
 B)False

Question 18

An example of an operating activity is:

Accepted Answer

A)  Paying wages. 
B)  Purchasing office equipment. 
C)  Borrowing money from a bank. 
D)  Selling stock. 
E)  Paying off a loan.

Question 19

Dividends are expenses.

Accepted Answer

A) True 
 B)False

Question 20

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Accounting is an information and measurement system that does all of the following except:

If assets are $99,000 and liabilities are $32,000, then equity equals:

Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or dividends to stockholders.

If the liabilities of a business increased $75,000 during a period of time and the stockholders' equity in the business decreased $30,000 during the same period, the assets of the business must have:

Creditors' claims on the assets of a company are called:

The ________________ assumption states that transactions and events are expressed in money units.

The first section of the income statement reports cash flows from operating activities.

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

If assets are $365,000 and equity is $120,000, then liabilities are:

The statement of cash flows reports all of the following except:

Another name for equity is:

Describe the income statement and the relation between revenues, expenses, and net income or loss.

Match the following terms with definitions.

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

An example of an operating activity is:

Dividends are expenses.

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.